CPS boss hears utility's offer

Updated 12:06 am, Saturday, February 2, 2013

Doyle Beneby expresses appreciation after he is offered a new contract during a board meeting at the CPS headquarters in San Antonio on February 1, 2013.

Doyle Beneby expresses appreciation after he is offered a new contract during a board meeting at the CPS headquarters in San Antonio on February 1, 2013.

Photo: Tom Reel, San Antonio Express-News

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Doyle Beneby thanks Mayor Julian Castro after he is offered a new contract during a board meeting at the CPS headquarters in San Antonio on February 1, 2013.

Doyle Beneby thanks Mayor Julian Castro after he is offered a new contract during a board meeting at the CPS headquarters in San Antonio on February 1, 2013.

Photo: Tom Reel, San Antonio Express-News

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Mayor Julian Castro leads execuatives back into the room after Doyle Beneby is offered a new contract during a board meeting at the CPS headquarters in San Antonio on February 1, 2013.

Mayor Julian Castro leads execuatives back into the room after Doyle Beneby is offered a new contract during a board meeting at the CPS headquarters in San Antonio on February 1, 2013.

Photo: Tom Reel, San Antonio Express-News

CPS boss hears utility's offer

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CPS Energy's board of trustees made its opening bid Friday to retain CEO Doyle Beneby, offering a package that would allow him to make up to $850,000 a year.

Under the proposed three-year agreement, Beneby's salary would increase to $425,000 per year from $410,000.

Also, Beneby could double his salary with short- and long-term bonuses if the city-owned utility meets certain performance goals. His current contract, which runs through July, contains a similar arrangement.

Trustees provided few other details, and CPS declined to provide a copy of the proposed contract to the paper, claiming it was a working document.

“I think the numbers are fair. I don't believe that will be an issue, or need it be,” Beneby said after Friday's board meeting, where the offer was made.

He said he'd need to discuss the proposed deal with his family before accepting it.

He also said there was room to negotiate with the board around the margins.

“There could be some other nuances related to the offer,” he said. “I think what the board extended is fair, and I don't expect there is much variance in the numbers that you heard today.”

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If Beneby returns to the utility for another three years, he said he would continue to focus on improving safety, expanding its clean-energy production and encouraging economic development.

CPS — which controls total assets of $10 billion — has been criticized for executive compensation in the past, and the issue returned to the spotlight after WOAI-TV ran a series of stories questioning expense reports filed by Beneby for food, entertainment and travel. He later gave the utility $5,000 to reimburse those expenses and apologized to ratepayers.

The board has taken heat for Beneby's current contract, which allows him to earn up to $820,000 a year if the utility meets performance goals for customer service, reliability, safety and other measures.

“We live in a world where we're compared to our peers who do what we do,” Beneby said. “The metaphor I like to use is that in football, when a quarterback is negotiating his salary that they don't compare themselves to offensive linemen or vice versa.”

After the TV station aired the stories on CPS compensation, trustees commissioned Towers Watson, a professional services consulting firm in New York, to conduct two surveys at a combined cost of $211,000 to examine pay levels at the utility.

One of the survey's findings was that Beneby makes 70 percent less than his peers when accounting for wages, bonuses, long-term incentive plans such as stock options, retirement and other pay.

The data underlying those findings wasn't made available to the San Antonio Express-News. However, CPS spokeswoman Lisa Lewis said Towers Watson examined chief executives' pay at 23 comparably sized utilities — with revenues that ranged from half to twice what CPS makes — to come to the conclusion.

A Hearst Newspapers investigation into the impact of deregulation on electric utilities across the country found Beneby earns $1 for every $7 to $9 that his counterparts at investor-owned utilities make.

That's in part because private-sector CEOs have to worry about, and are rewarded for, maximizing financial returns for investors.

The Hearst investigation found that between 2000 and 2011, the average CEO salary at investor-owned utilities grew by more than 150 percent to more than $6 million a year.

Mayor Julián Castro, who serves as an ex-officio member on the CPS board, defended the new contract proposal after the board meeting. He said Beneby's decision to close the coal-fired Deely power plant in 2018 would save millions in capital spending to comply with clean-air regulations, and that he improved the utility's efficiency.

“That's why we're paying him to do the great job that he's doing,” Castro said.